The idea of pair trading: Oil & Gas Drilling & Exploration ind.

1. it is long position in the company CXO (Concho Resources) and short position in the company ESV ( Ensco plc ).
2. it is long position in the company CXO (Concho Resources) and short position in the company CVE ( Cenovus Energy Inc .).

Stocks of the company CXO are stronger than ESV and CVE since 2013. I think that next 2 months stocks of the company CXO will be stronger than ESV ana CVE .

Risk-management:
I reccomend to use a conservative approach: half of allocated capital use in trade and half in cash.
Then the trade capital divide equally between 2 pairs: CXO-ESV and CXO-CVE.

The proportions of each company in pairs:
1. Volatility of CXO and ESV is equal, so:
* 51% it is long CXO .
* 49% it is short ESV .

2. Stocks of the company CXO are more volatility than CVE:
* 44% it is long CXO .
* 56% it is short ESV .

This allocation between stocks is necessary for the parity volatility.